City delegation to present Brexit blueprint to Brussels

Group aims to preserve passporting amid uncertainty over UK-EU talks

A City taskforce is heading to Brussels this week to defend London's access to European capital markets, amid worries the UK government is not listening enough to financiers' fears about Brexit.

The group has drawn up a plan for the City's relationship with the EU, in a bid to preserve the benefits of financial services "passporting" - the ability to do business throughout the EU area from a UK base.

Its proposals incorporate shared regulatory supervision, joint dispute resolution and a "mutual access" arrangement. This would allow as much two-way access between the UK and the European Union as possible, if Brexit were to pull the country out of the EU's single market.

The plan has also been reported to include a break clause, which would enable the UK or EU to suspend the agreement in extreme circumstances. Other details of the Brexit blueprint have not been disclosed.

The delegation, led by former City minister Mark Hoban, includes representatives from the International Regulatory Strategy Group - a group of financial services law specialists affiliated to TheCityUK and the City of London Corporation. The team has spent months drafting its free-trade plan, with advice from City lawyers Hogan Lovells.

Spokeswomen from Hogan Lovells and TheCityUK declined to comment. A representative from the City of London Corporation did not respond to a request for comment. The news was first reported by the Financial Times.

The move comes two weeks after negotiators in the UK and EU began Brexit talks in Brussels.

More than a year after the UK voted to leave the EU in June 2016, Miriam Gonzalez, a partner and co-chair of Dechert's international trade and government regulation practice since 2012, has said many people still struggle to understand what Brexit meant for their business.

Executives in the City have reiterated their concerns in recent weeks that they fears the effects of a so-called hard Brexit - with no passporting rights, free movement of people, or access to the single market and customs union - on European end-users of wholesale banking and capital markets services.

UK fund managers have complained to MJ Hudson, the independent asset management consultancy, that the UK Government should have consulted the asset management industry more before commencing Brexit negotiations, according to a report published today by the firm.

The report, based on a survey of more than 300 fund managers and investors in the UK, Europe and the rest of the world, found that 80% of UK fund managers do not believe the UK negotiation team has sufficient understanding of asset management in order to deliver a deal that works well for the UK industry.

Matthew Hudson, the chief executive of MJ Hudson, said: "Following the referendum result, which few in our industry wanted and fewer still expected, managers and investors alike are not waiting for the political vacuum to be filled.

"Instead, they are already implementing their own plans and setting up new EU offices and teams so that they retain and grow assets under management post-Brexit, however it plays out."

The week a new paper commissioned by the Association for Financial Markets in Europe lobby group has warned that under that scenario, the cost of restructuring could be as much as €15bn for banks in the UK.

The paper said European investors and corporates will need "regulatory support" and "a degree of patience" to re-document trading arrangements ahead of Brexit.